G.R. No. 118900 ; February 27, 2003
JARDINE DAVIES INSURANCE BROKERS, INC., petitioner, vs. HON. ERNA ALIPOSA, in her capacity as Presiding Judge of Branch 150 of the Makati Regional Trial Court, CITY (previously Municipality) OF MAKATI and ROLANDO M. CARLOS, in his capacity as Acting Treasurer of Makati, respondents.

FACTS

The Municipality of Makati enacted Municipal Ordinance No. 92-072, the Makati Revenue Code, imposing taxes at rates higher than the Metro Manila Revenue Code. Another taxpayer, Philippine Racing Club, Inc. (PRCI), appealed the ordinance’s validity to the Department of Justice (DOJ), alleging lack of required public hearings and constitutional infirmities. On July 5, 1993, the DOJ issued a resolution declaring the ordinance null and void for contravening the Local Government Code. Makati sought reconsideration and also filed a petition ad cautelam in the Regional Trial Court (RTC) to declare the ordinance valid, which petition was later granted by the RTC on October 26, 1993.
During this period, petitioner Jardine Davies Insurance Brokers, Inc., a Makati-based corporation, was assessed and paid its business taxes under the contested ordinance for the second, third, and fourth quarters of 1993 without any protest. After the DOJ’s nullification resolution, petitioner wrote to the Municipal Treasurer in January 1994 requesting a recomputation of its taxes under the Metro Manila Revenue Code and a refund or credit for alleged overpayments. This request was denied. Petitioner subsequently filed a complaint in the RTC seeking a declaration of the ordinance’s nullity and a refund.

ISSUE

Whether the petitioner is entitled to a tax refund or credit for payments made under Municipal Ordinance No. 92-072.

RULING

No. The Supreme Court denied the petition and affirmed the RTC’s dismissal of the complaint. The legal logic is anchored on the mandatory procedural requirements for challenging local tax ordinances under Section 187 of the Local Government Code. The law provides that any question on the constitutionality or legality of a tax ordinance must be raised on appeal to the Secretary of Justice within thirty (30) days from its effectivity. This statutory period is mandatory to prevent delays and ensure the orderly implementation of tax measures, which are crucial for local government revenue.
Petitioner failed to avail itself of this specific administrative remedy. It did not file an appeal with the Secretary of Justice within the 30-day period. Moreover, petitioner voluntarily paid the assessed taxes for three quarters without any protest, which constitutes a waiver of its right to challenge the ordinance’s validity. The subsequent filing of a court complaint after the DOJ resolution was merely an afterthought. The Court emphasized that the power to tax is essential for local governance, and protests must adhere to prescribed timeframes. Consequently, petitioner’s failure to comply with the mandatory appeal process is fatal to its claim for refund.